FORMER Barclays boss Bob Diamond has waived a potential £20 million in bonuses and share awards, but will still walk away with up to £2 million.

Barclays chairman Marcus Agius told MPs that Mr Diamond had decided to voluntarily forgo the entitlements after he quit as chief executive last week in the wake of the rate-rigging scandal.

Mr Diamond, whose severance package amounts to a year's salary and pension contribution, said he hoped the agreement "will help close this chapter and allow Barclays to move forward and prosper" after the bank was fined £290 million for attempting to fix the interbank borrowing rate Libor.

Mr Agius said the board "welcomed" the move by Mr Diamond to forgo his long-term bonus incentives.

He added: "The board deeply regrets the circumstances that led to Bob resigning his positions at Barclays.

"Despite having no personal culpability, he recognises more than anyone the negative attention that they have generated and has taken characteristically strong action to address that."

Today's announcement follows what are said to have been intense negotiations over Mr Diamond's leaving deal.

Mr Agius - who will remain at the bank while a successor to Mr Diamond is found - was the first executive to quit when the scandal emerged earlier this month, but his resignation was not enough to prevent Mr Diamond from being forced out.

Mr Diamond said on announcing his severance agreement: "For the past 16 years I've had the honour of working at Barclays.

"The wrongful actions of a relative few should not detract from the outstanding work that Barclays employees carry out each day on behalf of clients and customers around the world."

The former Barclays chief executive quit last Tuesday as the full scale of the scandal emerged.

He said in an appearance in front of MPs last Wednesday he felt "physically ill" when he discovered traders at his bank were manipulating the inter-bank rate.

Mr Agius is the third high-profile witness to appear before the Committee since last week as MPs seek to get to the bottom of the Libor scandal that has rocked the banking industry.

Bank of England deputy governor Paul Tucker appeared in front of the Committee yesterday and said he "absolutely" rejected suggestions he had leant on Barclays to manipulate a key lending rate or that Labour ministers had encouraged him to do so.

Responding to Mr Diamond's pay-off settlement, Prime Minister David Cameron's official spokesman said: "This is a decision for Bob Diamond and for the board of Barclays.

"I think the decision to forgo the bonus is a sign that they understand public concerns and that they understand that there is a need for a change in the culture of banks."